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July 15, 2010

On July 14, 2010, the Federal Trade Commission (“FTC”) announced an agreement with Nestle HealthCare Nutrition, Inc. (“Nestle”) to settle an FTC investigation with regard to alleged false and misleading health claims. The FTC's Complaint arose from claims made by Nestle for its beverage product, BOOST Kid Essentials, which employs an attached straw to deliver probiotics to the drinker. According to the Complaint, Nestle claimed in various advertisements that clinical studies showed that the product (1) strengthened children’s immune systems, (2) reduced the duration of acute diarrhea in children, (3) reduced illness-related absences from school and childcare, and (4) reduced fevers among infants. The Complaint asserted that clinical studies did not support these claims.

As part of the settlement, Nestle agreed to a Consent Order with some unusual, if not novel, provisions:

(1) Nestle agreed not to claim that the product prevents or reduces the risk of upper respiratory tract infections, unless labeling for such claims is approved by the Food and Drug Administration under the Nutrition Labeling and Education Act of 1990. We cannot recall many, if any, prior FTC Orders or Injunctions that contain specific language that a company cannot make a claim unless the claim is approved by FDA. Instead, the FTC has, for years, included a provision in numerous health claim orders that exempt claims from coverage under an Order if the FDA has specifically approved labeling for that claim.

(2) Nestle also agreed in Part II of the Order to cease making claims that the product reduces the duration of acute diarrhea and reduces illness-related daycare or school absences, unless it possesses "competent and reliable scientific evidence" which the Order defines as at least "two adequate and well-controlled human clinical studies" substantiating the representation. The Order specifies that these studies must be double-blinded and placebo-controlled, unless such conditions would be impossible to effectively and ethically implement. This language is a marked change from the language previously employed by the FTC in defining the substantiation an advertiser must possess.

(3) In Part III of the Order, the FTC prohibits other claims from being made unless Nestle has adequate substantiation. It is interesting that for these other claims, the Order employs a totally different definition of what constitutes "competent and reliable scientific evidence."

(4) It is also notable that although Nestle made the claims specifically for children up to age 13, the scope of the restrictions in the Order is not so limited.

In recent speeches, FTC officials had been stating that they intend to make their orders more specific. This was, in part, a response to the agency's failed effort to hold Lane Labs in contempt of its previous consent order. The district court there held that the issue was "a battle of experts" and found the company's experts more persuasive. In the recent amended order against Kellogg, the FTC added to its "competent and reliable" standard the requirements that the evidence be "sufficient in quality and quantity based on standards generally accepted in the relevant scientific fields" and that the evidence be "considered in light of the entire body of relevant and reliable scientific evidence." Those phrases were added to the Nestle order, along with the specific requirement of two adequate and well-controlled studies.